This may explain the growing efforts of Chinese businesses in recent years to "go global" themselves. Globalization is increasingly viewed as an alternative to domestic structural complexity.
This strategy will exact a heavy price, just as it did in Japan 20 years ago. The main lesson of Japan's approach is that launching an aggressive buying spree overseas merely upsets established international balances of interests -- thus generating greater tensions with the rest of the world -- while hiding the seriousness of structural problems at home.
China has much to gain by avoiding such a strategy. Focusing squarely on structural reforms would allay some of the fears that China's rise has inspired in the rest of the world, while winning praise from the international business community. Rather than scaring global corporations and their home states, China would retain strong political support abroad -- and the financing that it needs for its continued development.
In economic terms, China has no choice: it must remove the structural obstacles that stand in the way of rapid growth over the next decade or two. Above all, truly secure and sustainable economic development requires that it build a large consumer base at home.
Of course, the global imbalances associated with China's economic rise can take longer to adjust than they otherwise would, simply because the US welcomes it as being in the US' own interest. But China's long-term interest, and that of the world, requires that it get serious about domestic structural reform.
Zhang Jun is the director of the China Center for Economic Studies at Fudan University in Shanghai.
Copyright: Project Syndicate
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